Archived - Government of Canada Provides Unprecedented Support to Provinces and Territories

Ottawa, December 21, 2007
2007-108

Archived - Government of Canada Provides Unprecedented Support to Provinces and Territories

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The Honourable Jim Flaherty, Minister of Finance, today confirmed that Equalization and Territorial Formula Financing payments for 2008-09 will reach a combined total of $15.9 billion.

"This past year was a turning point in our history" said Minister Flaherty. "Our government restored fiscal balance in Canada, providing a solution that is principles-based and predictable. A restored fiscal balance will ensure provinces and territories have both the means and clarity of purpose to develop and provide programs and services that are important to Canadians."

As a result of our fiscal balance plan, Equalization transfers will increase by almost $700 million over the previous year, reaching an all-time high of $13.6 billion. This growth is largely due to an increase in overall provincial revenues resulting from a strong Canadian economy.

The new Equalization formula is based on the report of the Expert Panel on Equalization, known as the O'Brien report. The new Equalization formula bases entitlements on a comprehensive measure of a province's ability to raise revenues as compared to other provinces. In doing so, it ensures provinces can provide reasonably comparable levels of services at reasonably comparable rates of taxation.

The system is consistent with the original intent of the program, and accounts for why some provinces have seen their payments rise while provinces which have experienced above-average economic growth, due largely to strong resource revenues, will see their payments decline.

Transfers through the Territorial Formula Financing program also increased in 2008-09 by over $90 million compared to 2007-08, reaching $2.3 billion. Yukon will receive $564 million, the Northwest Territories $805 million and Nunavut $944 million as a result of the escalator attached to the program.

Equalization

N.L.

P.E.I.

N.S.

N.B.

Que.

Man.

Sask.

TOTAL

2008-09

($ millions)

Equalization

158

322

1,465

1,584

8,028

2,063

0

13,620

Accord Offsets

742

106

848

Total

899

322

1,571

1,584

8,028

2,063

0

14,468

$ Per capita1

1,781

2,310

1,679

2,111

1,038

1,732

0

2007-08

($ millions)

Equalization

477

294

1,465

1,477

7,160

1,826

226

12,925

Accord Offsets

494

68

563

Total

972

294

1,533

1,477

7,160

1,826

226

13,487

$ Per capita1

1,921

2,119

1,641

1,970

931

1,540

227

1Includes Equalization and Accord Offsets.
Totals may not add due to rounding.